A few years ago, a case addressing whether construction managers needed a contractor’s license to do business made waves in California. The case, The Fifth Day LLC v. James P. Bolotin, et al, surprised many when a California appeals court held that the state’s strong public policy favoring contractor licensing did not extend to “construction managers,” who were allowed to work on a project despite not having a license.
The question in that case really boiled down to whether a construction manager is a “consultant” or a “contractor.” In the event, the California court thought construction management work did not require a construction license, and therefore, construction managers were not “builders” or “contractors.”
That’s a small victory for construction managers in the state of California, as they can work (and get paid) without needing a license. But, what does this mean for their mechanics lien rights? If a construction manager isn’t paid on a project, in other words, can they file a mechanics lien or bond claim to recover in California?
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Unlicensed contractors cannot file mechanics liens in California, but since The Fifth Day holds a construction manager doesn’t require a license, this will not prevent them from filing a mechanics lien. The question here, however, is whether the work performed by a construction manager will qualify for mechanics lien rights.
Over the past few days, we talked about this issue of whether construction managers can file mechanics liens here on the Construction Payment Blog. In a post talking about the subject generally, we discussed reasons why the work may qualify and why it may not. Then we published a more specific post pointing to a case holding that construction managers could not file a mechanics lien in Washington state.
Construction managers have good reason to be optimistic in California since the Fifth Day case gives them a little momentum. However, they will still have to fit within the mechanics lien framework in the state.
The statutes provides that “A person that provides work authorized for a work of improvement, including, but not limited to, the following persons…” can file a mechanics lien. Construction managers will latch onto the “not limited to” language, since the statute doesn’t list them, and also argue that they provide “work” to a work of improvement. Work, according to the California statute, is “labor, service, equipment or material provided to a work of improvement.” The term “service” is undefined.
California appears to have a pretty broad statute in designating who has mechanics lien rights, and construction managers, especially after Fifth Day, likely fit in with rights to file mechanics lien claims.